Judge dismisses lawsuit attacking Phila.'s property assessment, tax system

A Common Pleas Court judge has dismissed a lawsuit that sought to have Philadelphia's property assessment and tax system declared unfair and illegal, and to force the city to reform it.

The Nutter administration agrees that the system is broken. It is in the midst of reassessing and affixing a market-rate "actual value" on each of the city's 577,000 properties.

Activists say they have seen too many efforts fail in the face of a backlash from voters facing higher tax bills.

"I can't imagine that short of a court order, we're ever going to fix this," said Brett Mandel, the lead plaintiff. "If the mayor was serious about fixing this, he would have joined our suit."

Instead, Mandel said, the administration paid "a white-shoe law firm" to fight the suit on "technicalities."

"The city didn't want to argue the merits of the case," he said. "So they decided to find a technicality to throw it out."

The suit, filed by Mandel and 17 other residential and commercial property owners, was tossed out Thursday by Judge Idee C. Fox. The city had argued that the plaintiffs did not have the standing to bring the suit, and the judge agreed.

Mandel, a tax activist and former candidate for city controller, said the plaintiffs would meet with their attorney this week to decide their next move.

"Obviously, an appeal is a pain in the neck, and there's no guarantees what will happen now," he said.

The current tax system is often unfair - homeowners can pay vastly different taxes for similar properties. Values are so discordant that Nutter froze reassessments on most properties last year.

Inquirer investigations have documented assessment inequities and a system badly broken. In 2008, an Inquirer analysis found that more than 97 percent of the city's properties had faulty assessments, many of them wildly wrong.

The administration has promised new assessments to property owners by fall 2012.

The lawsuit asked the court to order the city to conduct a reassessment and reform the system - but also to halt a 10 percent tax increase passed last year and set restrictions on future tax increases.

The mayor and Council also must decide whether the new tax rate based on the actual value of properties should be set at a level to bring in more money.

Administration officials have acknowledged that they expect to collect 20 percent more revenue under actual value - about $200 million more - than the $1 billion collected in 2010.

They argue that the city should be able to capture the rise in property values not reflected in the city's data during a decade of incomplete assessments and the two-year assessment freeze.

Mandel argues that this amounts to a "backdoor tax increase," and the lawsuit sought to use the courts to protect homeowners from facing "unmanageable" jumps in their tax bills.